What we should do with KiwiSaver continues to be a hot topic this election season.
The latest party to throw their idea into the ring is Labour, which wants to lift the employer contribution rate to 6% by 2032 – including when employees reduce or pause their own contributions.
If re-elected, it would also set the employee default at 4%, extend employer contributions to workers over 65, and keep contributions flowing for parents while they’re on paid parental leave.
Labour’s finance and economy spokeswoman Barbara Edmonds told The Front Page that while Labour and National want mandatory employer contributions set at 6%, they differ over an employee’s contribution.
“If you’re an employee or a worker and you cannot afford to contribute or match your employer in KiwiSaver, your only other option is to opt out, so you get zero.
“Whereas under the Labour proposal, you have at least 6% that is being contributed by your employer.
“What we’re saying is by being able to have that election of a different contribution rate, you can control more of what you’re getting in because also your employer is still providing that 6%,” she said.
Edmonds said National’s approach fails to address whether the employee can afford it.
“I absolutely understand, and my family was in the same position. I was in the same position, where as much as you wanted to be able to save for your future and for your retirement, actually, the everyday costs of today were more important.
“And actually, the Labour policy, because the employer contribution keeps going even if you can’t contribute or you can contribute only 2% rather than the 6% or 4%, it means there’s something still accruing for you so that you can deal with your everyday life without sacrificing what could be in the longer run for your betterment.”
Finance Minister Michael Cullen introduced a bill to create KiwiSaver in 2006. Photo / NZPA / Ross Setford
As Finance Minister for three terms from 1999 to 2008, Sir Michael Cullen designed KiwiSaver to help New Zealanders build long-term savings for retirement.
In 2006, when the KiwiSaver Bill was first introduced to Parliament, Cullen lauded the scheme as being “the best way ahead”.
“KiwiSaver will give hundreds of thousands of working New Zealanders a helping hand to secure their financial futures,” he said at the time.
As at March 2026, there were 3.44 million people enrolled in the scheme but nearly a third (about 1.05 million) were aged 18 to 64 and were not contributing.
“When KiwiSaver was brought in, the super fund was also brought in, and it was around that sort of dual ability for the Government and individuals to be able to save for those retirement costs that are coming down the track,” Edmonds said.
“I do believe that it’s been 21 years; that’s why Labour is coming with quite a significant shift in the decoupling of employee and employer contributions. It’s about time for that.
“When I looked at the old policy papers to kind of understand what Sir Michael was thinking when he developed it, he didn’t want it to be decoupled at the time because he wanted buy-in from both businesses and employees, but also he wanted to grow the KiwiSaver base.
“It’s now over 90% for salary and wage earners, around 60% for self-employed sole traders. Obviously, contribution rates are a little bit lower than both those levels. But I think it is sound. It’s provided the great foundations. The [FMA] Financial Markets Authority report last week showed that there’s around $40,000 on average in KiwiSaver accounts.
“It’s now time for the next KiwiSaver 2.0 to start basically seeing how we can accelerate those savings for savers.”
Listen to the full episode to hear more about:
- How do we compare to Australia?
- First-home withdrawals
- Cost-of-living v retirement savings.
The Front Page is a daily news podcast from the New Zealand Herald , available to listen to every weekday from 5pm. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
You can follow the podcast at iHeartRadio , Apple Podcasts , Spotify or wherever you get your podcasts.
